Bitcoins: Hacking Troubles and Proposed Regulations

Banker Resource February 14, 2014 — 1,108 views

Hacking websites is a thing of the past because these hackers have taken fancy to Bitcoins now. According to the spokesperson of one of the main trade organizations of Bitcoins, unknown computer hackers have been sending 'mutated' code lines in the Bitcoin programs that are responsible for running this virtual currency.

Two Bitcoin exchanges attacked

These are the same kind of attacks that are said to be the reason behind the problems that recently surfaced when two major Bitcoin exchanges were hit by them. These attacks had temporarily caused the exchanges to stop their services and putting their customers in a fix as they couldn’t withdraw the Bitcoins stored in their digital wallets, which were provided by these exchanges itself.

Jinyoung Lee Englund, the spokesperson of Bitcoin Foundation, one of the affected exchanges, said that these are Denial-of-Service kind of attacks. Lee further said that the people behind these attacks are not able to steal any coins but are still managing to prevent certain transactions from being carried out. However she gave a sigh of relief to the Bitcoin users when she said that these kinds of attacks can't affect the Bitcoin funds and wallets.

Lee also revealed that a group of core software creators who work on Bitcoins are looking into this issue and trying to fix it. But until the team resolves the problem, some users won’t be able to normally carry out their transactions with Bitcoins. Also, the hacked Bitcoins will look 'tied up' for a while. According to her, only those users who carry out a number of transactions in short time period will be affected by these hacks.

The other affected exchange, Bitstamp based in Slovenia, blamed DOS attacks and 'inconsistent results' for the hack. This was exactly one day after MT.Gox, which is among the most well-known digital market operators, had warned that such halts on withdrawals are likely to continue for an indefinite period of time. The reaction of the traders to this halt was quite strong as they stopped transacting, bringing the value of Bitcoins to its lowest in the past two months.

What regulations are being proposed?

While Canada has announced that it will tighten its virtual currency rules, NY 's Department of Financial Services superintendent, Benjamin Lawsky, is expecting the consumers to adopt capital requirements, disclosure rules and a framework that allows permissible investment by putting in consumer’s money. Lawsky mentioned that the objective of the department will be to provide suitable guard rails for protecting consumers and for rooting out money laundering.